Australia's carbon farming ranked by state

The Carbon Market Institute's second carbon farming scorecard found the federal government, NSW and WA all made significant improvements, but Queensland's carbon farmers remained the best supported in the nation.

The Commonwealth government's score rose eight points (78 per cent), off the back of a series of important reforms - including formalising the 2030 emissions reduction target - that will increase sustainable demand for carbon credits.

It also launched a review into the integrity of Australian carbon credits and promised to implement a range of recommendations to increase transparency of the system and strengthen market faith.

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NSW (71pc) saw a similar upward trajectory in this year's report, increasing its score by seven points. The rise reflected the state's work to combine carbon opportunities into the emerging natural capital market and quantifying the flow-on benefits of carbon farming.

Queensland (83pc) was the leading jurisdiction for the second year running, underpinned by strong capital outlay and the fundamental integration of co-benefits.

While it still has room for improvement in areas such as markets and policy integration and enabling private investment, the report recognised the state's third round of funding for the Land Restoration Fund, which earmarked $50 million in new carbon reduction and abatement projects.

South Australia, up seven points to 56pc, was a significant mover due to its Carbon Farming Roadmap, which will guide the state towards more nature-based solutions into its climate policy.

WA's considerable eight-point progress (53pc) was recognised following two completed rounds of funding for its flagship Carbon Farming Land and Restoration Program.

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CMI chief executive John Connor said there had been considerable progress at both a state and federal level, led by the federal government's reform agenda, but there was still more to be done to guide the carbon market out of its infancy.

"The next 12 months will be critical in continuing the progress made so far," Mr Connor said.

"Importantly, more work must also be done to better integrate and realise the Indigenous, social, environmental and economic co-benefits of carbon farming for local communities."

Victoria saw a five point bump (41pc), but the report found the state government had to create incentive packages to encourage agriculture stewardship.

Tasmania (37pc) is the only Australian jurisdiction to be carbon-negative. Its four-point increase was due to a $900,000 Landcare grants program and $10,000 rebate scheme for carbon farming consultations.

The report found there was significant work to be done in the Northern Territory (32pc) to seize its numerous carbon farming opportunities, but commended the NT government's effort to expand the industry within First Nations communities.

"At a state and territory level, improving incentives for landholders, progressing carbon farming roadmaps and assuring co-benefits for regional communities and environments will be key to further progress," Mr Connor said.